‘The Euro Can’t Survive in Its Current Form’
Despite the Euro Crisis, the Euro has been relatively stabile during the past months. Even as Equities markets trade in “panic” mood, the currency World has digested the problems in a controlled fashion. The question is though, will the Euro survive, and at what cost will the politicians hang on to saving the Euro. As we have argued, the Euro is just a political project, with no real benefits to society. Europe is too heterogenous in order to have one currency. Interview with historian Hans Joachim-Voth on Euro disappearing in it’s present form within five years;
SPIEGEL: Why do you think the euro was a dumb idea?
Voth: Because, at its core, it is a bad solution for a nonexistent problem — a political object of prestige with massive economic disadvantages. Everyone thought the common currency would cause all of the structural differences in the euro-zone countries to automatically disappear. But, after 2000, the low interest rates in the euro zone artificially fuelled growth in the weaker countries and caused real estate prices to skyrocket. This kind of speculative bubble is fun while it lasts. But every party comes to an end eventually. And then comes the rude awakening: Growth slows down, and unemployment rises. Since the banks have given out too many loans, they become a brake on growth. This causes an increase in the structural divergences that were actually supposed to decrease. The euro can’t survive for long without having much more redistribution between richer and poorer member countries or much more flexible economies. And neither of those things is politically feasible.